Vincent Gray urged to look beyond Natwar Gandhi in CFO search

Posted at 10:56 AM ET, 05/22/2012

Vincent Gray urged to look beyond Natwar Gandhi in CFO search

By Mike DeBonis

Gandhi’s term expires in less than six weeks. (Sarah L. Voisin/The Washington Post)

Come July 1, Natwar M. Gandhi’s second five-year term as the District’s chief financial officer will expire. In a high-stakes decision that’s mostly flown under the political radar, it falls to Mayor Vincent C. Gray(D) to reappoint Gandhi or find another candidate. A former D.C. Council member and a prominent civic activist are now urging him to open a nationwide search.

Bill Lightfoot and Marie Drissel have penned a letter asking Gray to consider other candidates for the CFO job. Lightfoot is a trial lawyer who served on the council from 1989 to 1997 and remains active in city politics; Drissel is a veteran Kalorama activist who led the recent opposition to Internet gambling legislation. They cite a series of well-publicized missteps under Gandhi’s watch, including the 2007 discovery of the $50 million Harriette Walters embezzlement scheme, in justifying a broader search.

“Taking into account the fiscal and economic challenges facing the CFO’s office, as well as several troubling cases of fraud and theft of public monies, we urge you to launch a national search for a CFO (which should include Dr. Gandhi) and hire the best possible candidate to steward the District’s finances,” Lightfoot and Drissel write.

Gray has thus far demurred on questions about Gandhi’s tenure, promising to address the matter after the D.C. Council passes the city budget for 2013. An initial budget vote happened last week; a final vote will take place early next month. Gray has generally had good relations with Gandhi dating back to his four years as council chairman, though the two recently clashed over the accuracy of Gandhi’s revenue estimates.

With less than six weeks remaining in Gandhi’s term, it is nearly impossible that a thorough search could be completed before it expires. Under city law, a CFO “may continue to serve beyond his term until a successor takes office.” But it’s unclear whether Gandhi — first appointed to fill out the remainder of resignee Valerie Holt’s term — would agree to remain if Gray decided to undertake a search that would be interpreted as a vote of no confidence.

Spokesmen for Gandhi and Gray both declined to comment on the letter. In recent weeks, the Washington Post editorial board and Washington Harry Jaffe have written in support of Gandhi; he also retains powerful friends on the council and on Capitol Hill.

The CFO’s office was established in the wake of the 1995 federal takeover of the District government and operates almost as a fourth branch of government. While the CFO is selected by the mayor and confirmed by the D.C. Council, he or she cannot be fired except for cause. The office retains near total control over the city’s financial matters, including tax collection, revenue and spending estimation, borrowing, lottery sales and more.

The letter in full:

Mayor Gray,

On June 30th, the job of the District’s Chief Financial Officer (CFO) will come up for renewal. Our next CFO will hold this five-year position until 2017. Taking into account the fiscal and economic challenges facing the CFO’s office, as well as several troubling cases of fraud and theft of public monies, we urge you to launch a national search for a CFO (which should include Dr. Gandhi) and hire the best possible candidate to steward the District’s finances.

Largely through the legacy of the Control Board and Congress, our CFO is, quite literally, in charge of all the District’s financial operations — from the Office of Tax and Revenue to the Treasury to all D.C. agency finances. The CFO writes the city’s fiscal analyses, estimates our projected revenues, and serves as our financial liaison to Congress, Wall Street, and the federal government. In addition, the CFO oversees D.C. Lottery, including its staff, marketing, and operations. Any office with this level of financial power will undoubtedly attract those who wish to take advantage for personal gain. The CFO’s office experienced financial scandals, theft, and contracting improprieties, including:

Former CFO General Counsel Saamir Kaiser steals approximately $250,000 from the Tobacco Settlement Fund.

Prior to the theft, a background check revealed that Kaiser was not a lawyer, despite having been hired as counsel. Regardless, he was retained in the CFO’s office, allowing him access to the funds he ultimately stole.

Despite paying millions, the District still does not have an integrated, computerized tax system.

The $67 million Integrated Tax System that the CFO hired Accenture LLC to develop and implement, ultimately cost us $140 million and had to be scrapped altogether. D.C. still lacks an integrated, computerized tax system. The real property system was installed in 1992, is piecemeal, flawed and should have been competitively bid years ago prior to the Harriette Walters theft.

The D.C. Real Property Administration office is victim to the largest theft of public monies in U.S. history.

Harriette Walters stole at least $50 million from the Real Property Tax Administration (where she worked as a manager) by taking advantage of the office’s blind spots and lack of oversight, especially the lack of an integrated computerized system. Not long after, tax office clerk [Mary Ayers-Zander] stole another $414,000. To date, it remains unclear whether proper financial security measures have been implemented.

DC loses $100 million by failing to collect recordation taxes.

In 2007, the CFO’s office suspended the collection of recordation taxes (taxes resulting from the refinancing of commercial properties) without public notice or consultation. This unilateral action continues to cost the District valuable funds.

Geneva Capital loses D.C. investment funds.

In 2003, Geneva Capital lost over $21 million in funds earmarked for the D.C. Charter School Credit Enhancement Fund. The CFO’s office hired Geneva, despite being warned by authorities that it had no operating history and planned to use our funds to buy a company the SEC identified as “wracked by fraud.”

Fake D.C. Lottery tickets are printed and cashed in a fraud scheme.

In 2006, the D.C. Lottery became the only U.S. lottery system to have its system breached. Persons (possibly even Lottery employees) printed fake lottery tickets and cashed them ($85,000 in a single day). No one was ever caught or prosecuted.

D.C. Lottery contracting procedures lack transparency.

Two botched contracting rounds for the lottery contract (worth an estimated $120 million) have raised significant questions about how our lottery is operated. Our Inspector General concluded that one bidder was improperly denied the award, while another was awarded the contract despite providing false and misleading assertions.

Jeff Thompson wastes millions of our healthcare dollars.

Despite audits showing oversight and management deficiencies that cost D.C. [millions] of dollars, Jeff Thompson was repeatedly awarded [Medicaid managed-care] contracts. Until the FBI raided his home and office while investigating Thompson for allegedly breaking campaign finance laws, Thompson headed the D.C. Chartered Health Plan, a $355 million per year program that provides health care to low-income residents.

Taken altogether, these events have cost the District at least $300 million and much more in terms of our reputation and image as a city.

Dr. Natwar Gandhi has served as Deputy CFO for 3 years, CFO for 12 years, and has been vital to turning around our finances and hastening our fiscal growth. However, as we step into this 21st century, we must have the security measures, fiscal oversight, and technical systems that will preserve and protect our funds for our citizens today and in the future. We must bar the door to fraud and misuse of public funds for good. We urge you and the City Council to use the regulatory provisions that will allow Dr. Gandhi to stay in place while we undertake a national CFO search to fill this most critical financial position for our city.

Marie Drissel

William Lightfoot

Kevin Wrege, Esq.

Founder & President

Pulse Issues & Advocacy LLC

Office: 202-625-1787

Mobile: 202-253-4929

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

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